Morocco’s foreign trade deficit expanded 5.5% y/y to MAD37.3bn in the first three months of the year amid rising both exports and imports, signalling sustained economic activity, private consumption and industrial demand, preliminary data from the Office de Change showed.

Total imports (CIF) rose 3.5% y/y to MAD93.6bn in the first quarter of the year lifted by increasing purchases of equipment (up 16.3% y/y), end consuming goods (up 15.8% y/y), semi-finished goods (up 10%) and food imports (up 7% y/y).

 In 2016, Morocco expects the agro output to decline and thus food imports to expand. Total imports consequently will resume growth, weighing on FX reserves and the CA balance. The pattern will partially be softened by sustained decline in oil prices.

Exports (FOB) increased just 2.2% y/y to MAD56.4bn in Q1 amid subdued EU demand for Morocco’s value-added products. Passenger cars exports climbed 10% y/y while those of agro items rose 6% y/y in Q1. Phosphates sales, however, remained in the red falling 5% y/y to MAD9.2bn.

As to Morocco’s tourism income, it rose 6.5% y/y to MAD12.1bn in January-March in good news for the country‘s services sector and related contribution to the current account balance. The country is also benefiting from the tourism outflow from neighbouring Tunisia. Net transfers from Moroccans working and residing abroad also increased 4% y/y at MAD14.5bn in January-March. The EU-based diaspora remains the key source of remittances. As to net FDI, it fell 25% y/y to MAD5.14bn in January-March due to high base effect.